Today is Thursday, January 16, 2020, and this is your daily oil stocks roundup. Today we’re looking at the valuations of Enterprise Products Partners LP (NYSE: EPD), Climarex Energy (NYSE: XEC), and Enable Midstream Partners LP (NYSE: ENBL).
Enterprise Products Partners LP (NYSE: EPD)
Enterprise Products Partners LP (NYSE: EPD) is a $63.53 billion company today with a one-year return of 5.66%. Let’s look at its price-to-earnings (P/E) ratio, its enterprise-value-to-free-cash-flow (EV/CF) ratio, and its debt-to-equity ratio to gauge whether or not it’s a good investment.
The company’s P/E ratio of 13.37 is 13.46% lower than the industry average of 15.45. That’s good. A company’s P/E ratio shows its price as a multiple of its earnings per share (EPS). A relatively low P/E ratio is generally an indicator that a company is undervalued.
Enterprise Products Partners LP’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 42.24 is 0.64% higher than its industry average of 41.97. Not a good sign. A company’s EV/FCF ratio measures its enterprise value (market cap adjusted for cash holdings and debt) against its free cash flow (how much money the company has after all of its cash outflows). A high EV/FCF ratio could indicate that a company is performing inefficiently, has too much debt, or is starved for cash.
The debt-to-equity (D/E) ratio of Enterprise Products Partners LP has increased by 4.17% over the last year. That’s not good.
A company’s D/E ratio equals its total liabilities divided by its shareholder equity. It’s a measure of a company’s financial leverage. A declining D/E ratio indicates that a company is decreasing its debt burden over time, while a rising ratio indicates that a company is taking on more debt over time.
Enterprise Products Partners LP has scored favorably on 1 of our 3 valuation metrics. With this in mind, we believe the stock is slightly overvalued.
Climarex Energy (NYSE: XEC)
Climarex Energy (NYSE: XEC) is a $5.262 billion company today with a one-year return of -29.57%. Judging by its price-to-earnings (P/E) ratio, its enterprise-value-to-free-cash-flow (EV/CF) ratio, and its debt-to-equity ratio, is it a good investment?
The company’s P/E ratio of 10.24 is 21.56% higher than the industry average of 8.424. That’s not good.
Climarex Energy’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of -58.12 is below zero. That’s not good.
The debt-to-equity (D/E) ratio of Climarex Energy has increased by 1.63% over the last year. That’s not good.
Climarex Energy has scored favorably on 0 of our 3 valuation metrics. With this in mind, we believe the stock is very overvalued.
Enable Midstream Partners LP (NYSE: ENBL)
Enable Midstream Partners LP (NYSE: ENBL) is a $4.678 billion company today with a one-year return of -29.27%. Is it a good value based on its price-to-earnings (P/E) ratio, its enterprise-value-to-free-cash-flow (EV/CF) ratio, and its debt-to-equity ratio?
The company’s P/E ratio of 9.11 is 41.04% lower than the industry average of 15.45. That’s good.
Enable Midstream Partners LP’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 20.19 is 51.89% lower than its industry average of 41.97. That’s good.
The debt-to-equity (D/E) ratio of Enable Midstream Partners LP has increased by 37.50% over the last year. That’s not good.
Enable Midstream Partners LP has scored favorably on 2 of our 3 valuation metrics. With this in mind, we believe the stock is a good value.
To summarize, we believe Enterprise Products Partners LP (NYSE: EPD) is slightly overvalued, Climarex Energy (NYSE: XEC) is very overvalued, and Enable Midstream Partners LP (NYSE: ENBL) is a good value.
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